UK - Second-quarter investment in London office increased by 64% over the previous quarter as international investors sought a "safeguard" for their capital, according to Cushman & Wakefield.

Recording first-half transactions worth £5.85bn (€6.64bn) - just short of the £6.6bn recorded from the whole of 2009 - the firm noted that funds and other overseas investors continued to dominate the market, accounting for around 66% of volumes.

Data for the City in the second quarter show transactions worth £1.9bn, with £1.3bn currently under offer or exchanged and £2.4bn available on-market.

The market was especially strong for large lot sizes during the quarter, including Hermes's sale of its Finsbury Circus asset to Invesco.

The note identified as "key drivers" for the trend a weak currency, geopolitical tensions, global economic instability and easy access to a "relatively stable market place with secure income".

But First Property chief executive Ben Habib was dismissive of the claims of potential rental growth, pointing out that "it would have to grow significantly to make up for those yields".

He added that investors had been gripped by "sentiment over sense - and what makes it so surprising is that it's happening so soon after the crisis".

Habib said: "When we thought it was overvalued in the middle of the last decade, other investors no doubt thought we were incredibly dull.

"But the prices investors are currently paying for London assets are just not justified by the fundamentals."

In the meantime, Cushman & Wakefield claimed investors were being frustrated by undersupply of investment-quality assets.

"The market is seeing demand outstrip supply, continuing the downward pressure on yields," it said.

Head of city investment Bill Tyser said turnover in the second half of the year was likely to be subdued as a result.